Famous Footwear 2003 Annual Report Download - page 5

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Wholesale Operations
The Company's Wholesale operations design and market branded, licensed and private label dress, casual and athletic footwear for
women, men and children at a variety of price points to approximately 2,000 retailers, including department stores, mass merchandisers,
national chains and independent retailers throughout the United States and Canada. The division is a resource for many of the nation's
largest retailers, including Wal-Mart, Payless ShoeSource, The May Company, Federated, Dillard's, Nordstrom, Sak's, Target, Sears and
Famous Footwear, as well as The Bay, Sears and Wal-Mart in Canada. The vast majority of the division's customers also sell shoes bought
from competing footwear suppliers.
In fiscal 2002, the division provided its customers with approximately 78 million pairs of shoes. Substantially all of this footwear was
imported through the Company's Sourcing division, except for those pairs produced at the company-owned manufacturing facility in Canada.
Wholesale orders for shoes are solicited by the Company's sales force, who is generally responsible for managing the Company's
relationships with its wholesale customers. Orders placed as a result of these sales efforts are generally taken before the shoes are sourced
with delivery generally within three to four months thereafter. Footwear is sold to wholesale customers on both a first-cost and landed basis.
First-cost sales are those in which the Company obtains title to footwear from its overseas suppliers and typically relinquishes title to
customers at a designated overseas port. Landed sales are those in which the Company obtains title to the footwear from its overseas
suppliers and maintains title until the footwear is inside the United States borders. Certain high-volume styles, particularly in the Naturalizer
and LifeStride lines, are inventoried to allow prompt shipment on reorders.
In addition to orders placed through the Company's sales force, the Wholesale division provides its retail customers the ability to directly
check inventory of all wholesale product in Brown Shoe's distribution centers, place orders, and track expected product arrivals over its
business-to-business Internet site, BrownShoeOnline.com. Approximately 900 retailers utilize this e-commerce tool. In addition, the
Company provides these retailers with its "E-direct" system that allows them to sell out-of-stock product, with the Company then shipping
the product directly to the consumer's home.
Major brand names owned by the Company include Naturalizer, LifeStride, Buster Brown, Connie, Fanfare and Brown Shoe. Each of
the Company's brands is targeted to a specific customer segment representing different styles and taste levels at different price points.
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Introduced in 1927, Naturalizer is one of the nation's leading women's footwear brands and is the Company's flagship brand.
Naturalizer products emphasize relevant and up-to-date styling with quality, value, comfort and fit. This brand is sold in department stores,
independent shoe stores and in the Company's Famous Footwear and Naturalizer retail stores.
LifeStride is a leading entry-level price point, women's brand in department stores offering contemporary styling. This brand is focused
on providing the consumer with "stylized casual" footwear at price points of $30 - $50.
The Buster Brown brand of children's footwear includes Buster Brown "classic" footwear offered to department stores and independent
retailers including The May Company and Famous Footwear. The Company is capitalizing on the strength and recognition of the Buster
Brown brand by marketing licensed and branded children's footwear under the Buster Brown & Co. umbrella. These products are sold to
mass merchandisers including Wal-Mart, Payless ShoeSource and Target. Licensed products include Barbie, Mary-Kate and Ashley, Spider-
Man and Bob the Builder. The Buster Brown & Co. umbrella provides customers with the assurance that these licensed products contain the
quality that they are accustomed to receiving from Buster Brown shoes.
In addition to the above mentioned children's licenses, the Company has a long-term license agreement, which is renewable through
2014, to market the Dr. Scholl's brand of affordable casual and work shoes for women and men both in the United States and Canada. This
footwear is primarily distributed through mass merchandisers. The Company also sells the Original Dr. Scholl's Exercise Sandal and a
related line of footwear under this license to department stores, national chains and independent retailers. In Spring 2003, this product will be
distributed in approximately 2,400 doors.
In 2001, the Company's Wholesale division launched a collection of women's shoes - Carlos by Carlos Santana - to major department
stores. This footwear is being marketed under a license agreement with guitarist Carlos Santana, and represents the Company's most
fashion forward line. It is distributed in approximately 400 department store doors.
The Company also has a license agreement for the HOT KISS label for junior footwear to complement the apparel line with the same
name. This line is in several major department stores and Famous Footwear.